Study: Trump’s Tariffs Are a $42 Million Regressive Tax Increase

The Trump administration’s tariffs on steel, aluminum, solar panels, washing machines, and a host of Chinese-made industrial and consumer goods have increased taxes by $42 million, with poorer Americans feeling more of a pinch.

That’s the bottom line of a new report on the tariffs published Wednesday by The Tax Foundation, a nonpartisan think tank. The Trump tariffs have reduced after-tax income by about 0.3 percent on average, according to the study, equating to a decrease of $146 in after-tax income for middle class Americans. The Tax Foundation’s economic model suggests that the tariffs will reduce the gross domestic product, a short-hand measure for the overall size of the economy, by about $30 billion while also depressing wages and costing more than 94,000 jobs.

“These tariffs will increase the tax burden on Americans, falling hardest on lower and middle-income households, and reduce economic output, employment, and wages,” writes Erica York, the author of the study.

If Trump follows through on his threats to impose more and higher tariffs on China along with new tariffs on imported cars, after-tax incomes would fall by an average of 0.92 percent, according to The Tax Foundation.

The study makes clear, once again, that American consumers and businesses are the ones who pay the price of tariffs—not China or Chinese-based exporters, as the Trump administration continues to argue. When goods subject to tariffs enter the United States, the import taxes added by the Trump administration artificially increase the price of those goods, and those higher prices are passed along to subsequent buyers. Higher steel prices, for example, get passed along the supply chain to increase the purchase price of everything from cars and homes to beer kegs and industrial widgets.